Succession
Estate constitution
What property constitutes an individual’s estate for succession purposes?
All assets owned by a person, including assets beneficially owned, form part of his or her estate. Assets that a deceased person holds on trust or only owns the legal title for will not form part of his or her estate whereupon the administrator or executor must return the asset to its rightful beneficial owner or, alternatively, hold on trust for such beneficial owner.
Disposition
To what extent do individuals have freedom of disposition over their estate during their lifetime?
Generally, individuals have wide freedom to deal with their assets as they wish during their lifetime. However, for Muslims, the Syariah courts have the power to determine division of matrimonial assets on divorce based on the parties’ contribution towards the acquisition or improvement of the asset. The matrimonial asset claim can be made immediately after the divorce or on death. If the claim is made after death, the estate may only be distributed after the issue of matrimonial asset claim has been disposed. The right to matrimonial assets does not only lie with the divorced parties but their respective estates may, on their behalf, make such claim.
To what extent do individuals have freedom of disposition over their estate on death?
Non-Muslims have full disposition on how their estates are distributed on death provided they have a will. However, if the testator intentionally leaves out their child whom they have been supporting, the child may make a claim to court to force the estate to make sufficient provision for them.
The distribution of a Muslim’s estate is subject to the following priorities:
- the payment of liabilities (which may include jointly acquired assets if claimed by the deceased’s spouse;
- a bequest of up to one-third of the value of the estate to non-faraid heirs; and
- fixed share distribution to the deceased determined heirs or otherwise by mutual agreement of the determined heirs.
Written wills of a Muslim can be drafted in many ways to include the appointment of executors and guardians of minor children. When it comes to distribution, the estate must, however, be distributed based on the above priorities. The wishes of a deceased Muslim must conform to the rules of distribution, failing which the consent of the determined heirs must be obtained. State legislation provides that express consent must be given after the death of the Muslim testator.
Intestacy
If an individual dies in your jurisdiction without leaving valid instructions for the disposition of the estate, to whom does the estate pass and in what shares?
If a non-Muslim dies intestate, his or her estate will be distributed in accordance with the Distribution Act. The general rule under the Distribution Act is that the surviving parents, spouse and children of the deceased are entitled to inherit. Therefore, if a person dies leaving:
- only the parents, then the parents are equally entitled to the entire estate;
- only the spouse, the spouse is entitled to the entire estate;
- only the children, the children are equally entitled to the estate;
- parents and a spouse, the parents would be equally entitled to half of the estate and the spouse would be entitled to the other half of the estate;
- parents and children, the parents would be equally entitled to one-third of the estate and the balance of two-thirds would be shared equally between the children;
- a spouse and children, the spouse would be entitled to one-third of the estate and the balance of two-thirds would be shared equally between the children; and
- parents, a spouse and children, the parents would be equally entitled to one quarter, the spouse would be entitled to one quarter, and the balance of half would be shared equally between the children.
However, if a person dies without the parents, spouse and children surviving, the entire estate will be held in trust for the persons in the following sequence:
- the siblings in equal share;
- if the deceased does not have any surviving siblings, for the grandparents in equal shares;
- if the deceased does not have any surviving siblings and grandparents, the aunt and uncles in equal shares;
- if the deceased does not have any surviving siblings, grandparents, aunts or uncles, the great grandparents in equal shares;
- if the deceased does not have any surviving siblings, grandparents, aunts, uncles or great grandparents, the great grand uncles and great grand aunts in equal shares; and
- if none of the persons stated above survives the deceased, the Malaysian government will be entitled to the entire estate.
On the death of a Muslim, the distribution of a Muslim’s estate by way of fixed share entitlement takes precedence, and it generally dictates that parents, spouses and children of the deceased, being the primary heirs, shall have priority over any other blood relations. Their fixed share entitlement as provided under the Quran are as follows:
- if a female dies leaving children, her husband is entitled to a quarter of her estate;
- if a female dies without leaving a child, her husband is entitled to half of her estate;
- if a male dies leaving children, his wife is entitled to one-eighth of his estate;
- if a male dies without leaving a child, his wife is entitled to a quarter of his estate;
- if a person dies leaving only his or her father, the father is entitled to the entire estate;
- if a person dies leaving his or her father and child, the father is entitled to:
- one-sixth if the child is a male;
- half if there is only one female child; and
- one-third if there two or more female children;
- if a person dies leaving only his or her mother, the mother is entitled to one-third of his or her estate, and the balance of the estate will be given to Baitulmal (Baitulmal is an institution that, among others, collects tax from Muslims and a portion of their estate that has no male heir. Baitulmal will subsequently distribute what they collect to the poor and those in need);
- if a person dies leaving his or her mother and child, the mother is entitled to one-sixth of his or her estate;
- if a person dies leaving only a son, the son is entitled to the entire estate;
- if a person dies leaving only a daughter, the daughter is entitled to half of the estate and the balance of the estate will be given to Baitulmal; and
- if a person dies leaving a son and a daughter, the son is entitled to two-thirds and the daughter is entitled to one-third of the estate.
It must be noted that the permutations above are merely a basic guide. The calculation will be more complicated when there are more heirs at varying levels.
Adopted and illegitimate children
In relation to the disposition of an individual’s estate, are adopted or illegitimate children treated the same as natural legitimate children and, if not, how may they inherit?
Adopted children of non-Muslims are treated similar to children who have legitimate status. By the law of inheritance, legitimate children have priority over an illegitimate child. The right of an illegitimate child to inherit arises only under the following circ*mstances:
- if the mother dies intestate without leaving any legitimate child;
- if the mother dies testate, the illegitimate child is named in her will; and
- if the father dies testate, the illegitimate child is named in his will.
Under Islamic law, the adopted children of a Muslim couple do not inherit from their adoptive parents. The adoptive parents may, however, bequeath up to one-third of their estate to the adoptive children who, by law, are not their legal heirs. Illegitimate children can inherit from their biological mother but not biological father. A Muslim man can, therefore, bequeath up to one-third of his estate to his biological illegitimate child.
Distribution
What law governs the distribution of an individual’s estate and does this depend on the type of property within it?
When it comes to the distribution of assets, a different set of laws may apply to govern different classes of assets. This can be classified into two categories, namely, immovable assets and movable assets. Lex situs refers to the law of the place in which the property is situated, and lex domicilii refers to the law of domicile of the deceased. The general principle is that the lex situs governs the succession and administration of immovable property, while the lex domicilii governs the succession and administration of movable property. For the disposal of a foreigner’s immovable assets (real properties) in Malaysia, Malaysian laws will apply as immovable properties are governed by laws of the locality (lex situs). For the disposal of a foreigner’s movable property, which may include vehicles, bank accounts and other personal belongings, the relevant laws applicable would be the laws of his or her domicile (lex domicilii).
Formalities
What formalities are required for an individual to make a valid will in your jurisdiction?
The required formalities of a valid will under the Wills Act 1959 are that:
- it is in writing;
- it is signed by the testator at the foot of the document with the intention to make a will;
- it is signed by the testator in his or her presence before two or more witnesses; and
- the signature of the testator is attested by the witnesses in the presence of the testator.
The Wills Act only applies to non-Muslims.
Under Islamic law, awasiat(will by a Muslim) can be made in writing, orally, or by way of signalling made before two male witnesses. In legal practice for purposes of obtaining grant of probate and the appointment of an executor, awasiatshould be prepared in writing and closely conform to the formality of a valid will required under the Wills Act as stated above.
Foreign wills
Are foreign wills recognised in your jurisdiction and how is this achieved?
Malaysian courts recognise the validity of foreign wills. Such wills become enforceable through resealing the grant of probate if such grant of representation was obtained in a Commonwealth country. Grant of representation from a non-Commonwealth country is not recognised, and a fresh application for letters of representation must be made in Malaysia.
Administration
Who has the right to administer an estate?
For an intestate estate, the right to administer the estate is given to the person appointed by the court. The class of persons entitled to administer an intestate estate include the next of kin and creditors. For a testate estate, the right to administer an estate is given to the person named as executor.
How does title to a deceased’s assets pass to the heirs and successors? What are the rules for administration of the estate?
In Malaysia, estate administration is governed under the Probate and Administration Act 1959. The jurisdiction for obtaining grant of representation is dependent on the value of the estate and the type of asset comprised within the estate. Where the deceased died leaving a will, the application shall be made in the High Court of Malaya for the issuance of the grant of probate. Where the deceased died intestate, the jurisdiction for the issuance of letters of administration is as follows:
- if the estate comprises of only moveable assets of less than 600,000 ringgit in total gross value, the application for letters of administration can be made through Amanah Raya Berhad;
- if the estate comprises of immoveable assets of less than 2 million ringgit in total gross value, the application for letters of administration shall be filed with the District Land Administrator where the immoveable asset is located; or
- if the estate comprises of various assets of more than 2 million ringgit in total gross value, the application for letters of administration shall be filed with the High Court of Malaya.
Once a grant of probate or letters of administration has been issued, the successor of a deceased person, being either the executor or administrator, will be required to call-in the assets of the deceased into his or her possession before distribution. It is a requirement of the law that in the case of an intestate estate, the disposal of any immoveable property to the beneficiary or third party can only be effected subject to the administrator obtaining a court order.
Challenge
Is there a procedure for disappointed heirs and/or beneficiaries to make a claim against an estate?
There is no specific procedure. Disappointed heirs or beneficiaries should write to the estate or the administrator or executor detailing their disappointment and specifying their claims. Subsequently, they can negotiate, mediate or even commence an action in any court against the estate or the administrator or executor. As facts, cause, claims and jurisdiction (civil or Shariah) vary on a case-to-case basis, it is highly advisable to seek proper legal advice from the start.
